Software Assurance: To Renew or Not To Renew?

Many companies will face a serious decision once their Software Assurance (SA)
license comes up for renewal later this year. According to a report recently
released by Forrester Research Inc. analyst Julie Giera, 57 percent of the 63
companies interviewed didn't plan to renew or hadn't yet decided on a course
of action. Eighty-six percent of the companies (which had PCs ranging from 5,000
to 50,000 desktops) will see their license expire before the end of the year.

Overall, response to SA has been less than enthusiastic (see "SA
Exposed," April 2005). According to Giera's report, most companies
question the value of a licensing program like SA, which has an annual cost
of 29 percent of desktop licenses and 25 percent of server licenses. The program
promises regular software releases and updates, special training and content
available only through SA.

Giera's report details customer concerns like long upgrade cycles, no roadmap
for new products or upgrades, and the overall costs associated with SA. "Microsoft
has to get much better at hitting its release dates," says Giera. "Customers
still see the majority of value in SA as upgrades."

What
choice are you likely to make with your agreement?

[Click on image for larger view.]

Base: 61 IT procurement professionals (percentages
may not total 100 because of rounding).

Giera offers companies advice on how to get the most bang for their buck if
they do choose to renew their SA licenses. Her suggestions include:

Hold out for the best deal. Giera suggests insisting on discounts
of at least 7 to 15 percent, depending on the size of your organization.

Negotiate for extras. Giera suggests outlining your business needs
for the next three years to better understand what extras you might want to
include in your negotiations.

Carefully consider your financials. Although it seems like common
sense to do so, Giera urges you to take a hard look at what you're really
going to need to ensure that your SA investment makes financial sense.

Consider the risks. Before making a final decision, Giera says to
think about what changes Microsoft is likely to make and whether these changes
are worth the risk of tying your technological and financial future to a licensing
program like SA.

SA makes sense for companies that up-grade on a regular schedule, says Giera,
so it requires significant forethought. "Deriving value from SA is going
to be tied to understanding the logical business plans at your company over
the next four to five years," she says. "Is it reasonable to expect
that you'll be installing an upgrade every two years? What is the pace of business
change?"